Thukten Zangpo

The country’s national debt increased to Nu 290.3 billion as of September 2024, equating to 95.2 percent of the estimated gross domestic product (GDP) for the fiscal year 2023-24.

This is an increase of Nu 5.1 billion, or 1.8 percent, from June this year, according to the Finance Ministry’s latest quarterly public debt report.

The national debt—comprising both external and domestic obligations—grew by Nu 17 billion, or 6.3 percent, compared to the same month last year.

External debt, primarily driven by hydropower projects and budgetary support from international lenders like the World Bank and Asian Development Bank, among others, stood at Nu 266.66 billion in September, an increase of Nu 2.96 billion from June this year. This was mainly because of an increase in government debt.

Of this, government debt accounted for Nu 163.24 billion, while public corporations, including hydropower entities, held Nu 12.9 billion. The central bank, Royal Monetary Authority, accounted for Nu 10 billion in standby credit facilities from India.

Hydropower-related debts from six major projects—Mangdechhu, Puna-I, Puna-II, Nikachhu, Dagachhu, and Basochhu—decreased by 4 percent to Nu 166.97 billion, making up 62.6 percent of total external debt.

Non-hydro debt, however, rose by 3 percent to Nu 99.69 billion, comprising 37.4 percent of external liabilities. Domestic debt rose to Nu 23.6 billion, up by Nu 2.12 billion, largely due to the government issuing treasury bills worth Nu 2.5 billion.

In addition, when the National Cottage and Small Industry Development Bank (NCSIDB) merged with the Bhutan Development Bank Limited (BDBL), the finance ministry’s borrowings and lending were restructured to clean the balance sheet of the transferee bank (BDBL).

The on-lending of Nu 700 million by the ministry to NCSIDB was adjusted against the 10-year government bond subscription by BDBL, leaving the bank with Nu 800 million worth of this bond out of a total of Nu 2.3 billion.

The finance ministry also prematurely liquidated the government’s 5-year bond amounting to Nu 1 billion on April 11 this year.

INR-denominated debt (64.6 percent of external debt) was recorded at Nu 172.37 billion while convertible currency debt stood at USD 1.13 billion or Nu 94.29 billion, down by USD over USD 400 million or Nu 3.15 billion.

The finance ministry estimates that debt servicing will account for 21.8 percent of domestic revenue in the fiscal year 2024-25, remaining within the 35 percent threshold set by the Public Debt Management Policy 2023.

Meanwhile, the central government debt, currently at Nu 104.12 billion or 34.2 percent of GDP, is way below the policy ceiling of 55 percent.

The government-guaranteed loans stood at Nu 4.34 billion, including the sovereign guarantee of Nu 489.42 million under National Credit Guarantee Scheme.